Satellite Telecom | Eutelsat, SES Pull All-nighter To Complete Court-ordered Lease Swap

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PARIS — Europe’s two principal satellite fleet operators on Oct. 4 completed an all-night transfer of satellite leases from one to the other affecting 10 million European households in an effort to respect their mutual promise that a dispute between them should not disrupt customers’ transmissions.

By 4 a.m. Oct. 4, Eutelsat of Paris had off-loaded to SES of Luxembourg all customers on 500 megahertz of spectrum — 16 transponders — in conformance with a German court order. The German-registered bandwidth had been aboard the Eutelsat 28A satellite. Under an agreement of more than a decade’s standing, SES had been leasing, at below-market prices, the capacity from Eutelsat and then selling it to its own customers.

SES’s court victory, which Eutelsat is challenging, means the Luxembourg operator will no longer be paying its chief rival around 25 million euros ($33.8 million) in annual fees for the bandwidth, a savings that will go straight to the company’s gross-profit line.

For Eutelsat, the development means it has a 25 million-euro hole in its revenue base that may force an adjustment of its forecasts for annual performance.

The Oct. 4 deadline was a date set by SES and its customer, Media Broadcast of Germany, about a year ago when they announced that Media Broadcast would be switching from Eutelsat to SES. A separate but related set of issues on division of the orbital resources around 28.5 degrees east has been in arbitration at the International Chamber of Commerce in Paris, which issued a preliminary ruling favoring SES in September.

A civil court in Bonn, Germany, later that month issued a preliminary injunction in SES’s favor, a decision that forced Eutelsat to respect the Oct. 4 transfer date.

“Eutelsat and SES are in discussions to find a solution regarding the subject matter of the arbitration,” Eutelsat and SES said in a joint statement Oct. 4, referring to the broader question of their sharing of orbital resources over Europe. Eutelsat added in a separate statement that “If necessary, Eutelsat will adjust the financial outlook published on 30 July 2013 once the [arbitration’s] outcome is known.”

Eutelsat said that before the judgments favoring SES, it had expected to receive 20 million euros in SES payments between October and next June 30, when Eutelsat’s fiscal year ends.

It had been scheduled to receive 25 million euros from SES in each of the two following years under the now-ended lease arrangement.